journal article
LitStream Collection
Home
Dimitrijevic, Dragomir; Jovkovic, Biljana; Milutinovic, Suncica
2021 Journal of Financial Crime
This study aims to investigate what are the capabilities and limits of external audit in detecting frauds in companies operating in the territory of the Republics: Serbia, Croatia, Macedonia and Bosnia and Herzegovina.Design/methodology/approachIn total, 51 certified auditors from Serbia, Croatia, Macedonia and Bosnia and Herzegovina were surveyed to analyze what are the most frequent warning signals of the existence of the frauds auditors encounter during the verification of company’s financial statements.FindingsThe study indicated that the auditors of the Republic of Serbia more often encountered groundless overstatement of revenues compared with other countries, while regarding manipulative representation of inventories, the largest mean value and median are still among the auditors of the Republic of Serbia.Practical implicationsBased on the research results, it can be concluded that it is necessary to expand the legal obligation and power of external auditors when, in financial statement auditing, they come to clear findings that indicate fraud. Expansion of external auditors’ powers would reduce their current limitations and expand the domain of action.Originality/valueLimitations in external auditors’ work prevent the processing of frauds. However, auditors’ analysis of financial statements and pointing to potential irregularities can be a good manner for the early detection and prevention of frauds in company’s operations.
Lokanan, Mark Eshwar; Liu, Susan
2021 Journal of Financial Crime
This study aims to examine the demographic factors of investors, contributing to financial victimization that occurs in Canada from June of 2008 to December of 2019.Design/methodology/approachIn all 235 cases disclosing the details of financial crime victims are collected from the Industry Regulatory Organization of Canada (IIROC) enforcement platform between June of 2009 and December of 2019 for the analysis. The study used a descriptive analysis to showcase the demographic characteristics of investors who have been victims of financial crimes in Canada.FindingsThe findings indicate that these investors of age 60 and above were more likely to fall prey to various types of financial crime. The results also disclosed that retirees and investors with limited investment knowledge increase the probability of being vulnerable to the perpetrators than others.Research limitations/implicationsOverall, the study helps regulators in the securities industry gain insights into demographic portraits of the more vulnerable investors. Hence, more precautionary measures could pitch into these concerns to protect specific subsets of investors from investment fraud.Originality/valueIndividuals who are more vulnerable to investment fraud might not be entirely comparable with the stereotypical victims that most studies portray. The research gap could cause individual investors who appear to be at lower risk to unconsciously fall prey to investment fraud. The IIROC study, detailing the demographic factors of victims, can fill the gap and improve understanding of the tendency of victims.
2021 Journal of Financial Crime
The purpose of this paper is to critically examine the Economic and Financial Crime Act 2004 to investigate whether there are defects in the 2004 Acts which enable abuse of the system by those who are responsible for fighting corruption and other economic crimes in Nigeria.Design/methodology/approachThe paper adopts qualitative methods of research. The research studied the laws and regulations relevant to the recovery and management of proceeds of crime. However, personal experience of the author in the civil service, security and law enforcement accounts significantly.FindingsThe paper finds that the provisions of the EFCC Act 2004 relevant to the recovery of proceeds of crime and management of recovered assets are defective. The 2004 Act contains loopholes that enable mismanagement and diversion of recovered assets for personal use. Although the EFCC Act empowers the Minister of Justice to issue Regulations to regulate the activities of the EFCC, the Asset Tracing, Recovery and Management Regulations 2019 the Minister of Justice issued cannot be used to close the loopholes. Thus, there is an urgent need to amend the EFCC Act 2004.Research limitations/implicationsNon-availability of data on the mismanagement of seized and recovered assets is a severe limitation. Thus, analysis in this research focuses on the laws and regulations to illustrates the defects in the 2004 Act. Also, the study could only use reported cases and incidence of corruption among the security and law enforcement to illustrate unsuitability of security and law enforcement for the position of the chairman of the EFCC.Originality/valueThere is no comprehensive work that examines the defects of the provisions of the 2004 Act that breeds lack of transparency in the recovery of proceeds of crime as well as mismanagement of recovered assets. Therefore, this paper is of value to the Nigerian Government and the National Assembly in considering amendments to the EFCC Act 2004. The paper is also of importance to researchers.
Alawamleh, Kamal Jamal; Abu Helo, Shadi Helo
2021 Journal of Financial Crime
This study aims to examine the application of the fraud exception to the autonomy principle that governs the work of letters of credit in both Jordanian and English law. While it has been reiterated that the application of such exception before the English courts is difficult, this study highlights and critically analyzes some of the reasons that lie behind such a difficulty. Moreover, this study compares the English approach with the Jordanian approach to this specific area of law to find out what each can benefit from the approach of the other. The extent to which both approaches have been successful in applying such an exception will be examined thoroughly in this paper.Design/methodology/approachTo examine how effective is the approaches followed by the English and Jordanian Courts in applying the fraud exception in this context, this work makes use of the secondary data available in this regard as the main method to complete such an examination. By critically analyzing and comparing the various data contained in these sources, this work identifies the problems associated with such approaches.FindingsThis work suggests that while the autonomy principle in letters of credit has what shall maintain its role as an important principle, the fraud exception application shall be facilitated. It further submits that the English Courts attitude to this specific area of law is somehow ambiguous and intertwined as it does not distinguish between two different stages that are existent in this context, namely, the submission of the documents stage “the prerequisite” that in case of submitting genuine, truthful and complying documents would activate the autonomy principle and the following stage which starts after activating the autonomy principle and which to it a fraud exception can be applied.Originality/valueThis work proposes that a beneficiary of a letter of credit shall satisfy a prerequisite before it can be said that he is protected under the autonomy principle. Such a prerequisite dictates that he shall submit genuine, truthful and complying documents to activate the autonomy principle and once the beneficiary submits such documents it can be said that the autonomy principle, which fraud is an exception to it, has been activated. Furthermore, this work proposes that English Courts shall adopt an approach similar to the Jordanian approach in relation to the application of the fraud exception, whereas the latter requires proving neither the beneficiary’s fraudulent intent nor his knowledge of it but rather applies a more realistic test concerned merely with the goods’ quality and quantity.
2021 Journal of Financial Crime
The purpose of this paper is to examine how much the basic tenets of conscious capitalism could favor organizational change and anticorruption strategies.Design/methodology/approachThe paper questions the vagueness of the tenets and principles of conscious capitalism. It unveils the idealized worldview of conscious capitalism, as it is based on a “pseudo-humanistic and pseudo-holistic” philosophy. The paper analyzes various kinds of rationale for justifying anticorruption measures and explains how the conscious capitalism movement should assume the challenge to develop one or the other rationale.FindingsThe conscious capitalism movement does not have basic rationale for any self-justified discourse about anticorruption measures. The principles of conscious capitalism organizations can be coherent with a rationale of individual and organizational compliance. They could be suitable with a rationale of legal, industry and international compliance. We could expect that the principles of conscious capitalism allow radical changes in the organizational culture. However, the main principles of conscious capitalism are not explicitly related to any rationale for a corporate self-justified discourse about anticorruption measures.Research limitations/implicationsThe three kinds of rationale for corporate self-justified discourse about anticorruption measures are not exhaustive. There can be other kinds of corporate rationale. Moreover, the conscious capitalism movement appeared in 2000s and is still evolving. So, we should never take for granted that the present ideals and principles of conscious capitalism will never be improved and deepened.Originality/valueThe paper explains how the conscious capitalism movement remains unable to present its rationale for justifying anticorruption measures. In doing so, it provides three kinds of rationale that conscious capitalism organizations could use to develop their corporate self-justified discourse about anticorruption policies, measures and programs.
Benedetti, Hugo; Nikbakht, Ehsan; Sarkar, Sayan; Spieler, Andrew Craig
2021 Journal of Financial Crime
The purpose of this paper is to develop conceptual designs for blockchain implementations aimed at reducing corporate fraud. The proposed framework consists of different levels of implementation with specific examples for each level.Design/methodology/approachThe paper uses a multi-level framework to highlight the properties of blockchain technology as suitable for reducing corporate fraud. The five levels of technological complexity designed for this research include information storage, information flow, information processing, information enhancement and information and financial integration. Specific cases of corporate fraud are discussed to complement the proposed methodology.FindingsThe potential ability to limit fraud and increase transparency could greatly improve faith in financial reporting. These benefits accrue to all capital market participants. The blockchain infrastructure can significantly improve the existing monitoring system and provide value added in detecting, deterring, and documenting possible fraud.Originality/valueThe paper contributes to the growing field on corporate fraud and blockchain technology. The paper is novel in the implementation of the nascent blockchain methods to detect and deter fraud at the organizational level. The proposed five conceptual levels provide practical use.
2021 Journal of Financial Crime
Cressey’s Fraud Triangle has been referenced in 8,584 studies and academic papers [1] and is a stalwart of training courses for accounting and audit practitioners and fraud investigators. The Fraud Triangle has endured for three decades in the academic and practitioner worlds. This study aims to explore the origins of Cressey’s Fraud Triangle and challenge its practical value to a fraud investigator.Design/methodology/approachThis study has developed from analysis of a targeted literature review carried out as part of a wider study into occupational fraud and corruption.FindingsCressey’s name is intrinsically linked to the Fraud Triangle, although he never used the expression during his lifetime. Two of the three motivational factors identified by Cressey (1953) were developed from the earlier work of Svend Riemer (1941), who it is suggested should have equal billing with Donald Cressey for the concepts that led to the creation of the Fraud Triangle.Practical implicationsThe paper illustrates the limitations of Cressey’s Fraud Triangle for practitioners.Originality/valueMany academics and researchers have either misunderstood Cressey’s role in the development of the Fraud Triangle or been unaware of its true origins. Although the pioneering work of Riemer is referenced in a 2014 study on the Fraud Triangle by Alexander Schuchter and Michael Levi, to the best of the authors’ knowledge, this paper is the first to identify the influence of Riemer on Cressey’s thinking and the development of the Fraud Triangle.
2021 Journal of Financial Crime
The purpose of this paper is to examine the association between audit report lag (ARL) and tax avoidance and test whether external auditor type affects this relationship.Design/methodology/approachARL is measured as the number of days from fiscal year-end to the date of the auditor’s report, while tax avoidance is measured using effective tax rate.FindingsUsing a sample of 45 South African companies over the period of 2010–2013, the authors document that ARL is positively associated with tax avoidance and this relationship remains positive when the company is audited by a Big-4 audit firm and not significant when the company is audited by a non-Big-4.Originality/valueThe authors’ findings have important implications for auditors aiming to reduce audit risk as they may consider the impact of tax avoidance and pay more attention to companies with a high degree of tax avoidance.
Orth, Caroline de Oliveira; Maçada, Antônio Carlos Gastaud
2021 Journal of Financial Crime
This paper aims to investigate how the literature has been addressing the relationships between corporate fraud and executive behavior and corporate fraud and information technology (IT) controls.Design/methodology/approachA systematic literature review was performed following the planning phases proposed by Levy and Ellis (2006), illuminated by the research onion, developed by Saunders et al. (2007).FindingsThe main findings of the studies analyzed refer basically to models to assess the risk of fraud. These risks originate from the market, from the organization itself or from individuals and also from their relationship networks. Subsequently, the main risks identified by the authors were classified according to their origin, the main theories approached and the “solutions” for the risks presented by the authors as the product of their work.Research limitations/implicationsIt should be noted that this study is not free of limitations, of which two stand out: the full body of articles on the subject was certainly not evaluated. Although the search has been systematic and judicious both by the combination of keywords for the searches, as well as by the use of the main databases and also by the rigor in the description of the procedures and the analysis of the articles in the light of Research Onion was based on the authors’ knowledge that may have been limited in some respect.Practical implicationsAs a practical implication, there is the relationship of red flags and their classification by origin, as they can be very useful for planning the work of internal and external auditors.Social implicationsIt is considered that this work can be a starting point for scholars who are interested in the corporate fraud phenomenon, given that the data was collected and organized systematically.Originality/valueThe analysis of the articles in relation to Research Onion shed light on the main philosophical and methodological characteristics of the studies. Also, regarding the relationships between corporate fraud and IT controls, existing scientific research appears to be limited. Searches for the terms information technology and information systems were extended, as well as search strings tested with the terms data governance and IT governance without results. This fact demonstrates that there may be (as far as the results have reached) a vast area of research on corporate fraud in the field of systems knowledge and information technology.
Showing 1 to 10 of 23 Articles